MAF 2016 to 2017 financial management methodology

Table of contents

Methodology overview

The annual MAF assessment in the area of Financial Management aims to improve oversight and management practices in departments as well as to support the Government of Canada’s strategic direction for financial management.

This Area of Management measures the departmental financial management performance in key foundational areas. Given the maturity of the financial management policy suite, this Area of Management also serves as a means to assess compliance with Treasury Board policy instruments on a targeted basis.

The Financial Management key foundational areas for MAF 2016-17 include: 

  • External Financial Reporting
  • Resource Management
  • Internal Control Management
  • Transfer Payments
  • Stewardship of Financial Management Systems
  • Financial Community Capacity

These areas will be assessed using two aspects: management practices and management performance.

Questionnaire

External financial reporting

Outcome statement: Accurate financial information demonstrates that financial resources are well managed and accounted for transparently.

Rationale pertaining to questions below: Canadians and parliamentarians expect that financial resources are well managed and accounted for transparently. The MAF assessment will provide deputy heads with useful information that will help them ensure effective measures are in place to support these responsibilities related to financial reporting.

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. Number of 2015-16 in-year and year-end post-closing entries, unadjusted audit misstatements, and year-end errors found after tabling of Public Accounts of Canada.

Organizations should strive to have zero in-year and year-end post-closing entries, unadjusted audit misstatements, or year-end errors found after tabling of Public Accounts of Canada.

Financial Administration Act, 65

TBS-OCG will respond using existing data within the central agency (RG and OAG reports).

  • Management Performance
    • Performance Indicator
  1. Do the 2015-16 financial statements include the new or revised reporting requirements for Department and Agency Financial Statements for Fiscal Year Ending as communicated to Deputy Chief Financial Officers by the Office of the Comptroller General (OCG)?

    • Yes
    • No

Department and agency financial statements should conform to the reporting requirements communicated by the OCG.

N/A

TBS-OCG will respond using existing data within the central agency.

  • Management Practice
    • Practice

Resource management

Outcome statement: Management of public funds is supported by effective planning, budgeting, monitoring and reporting.

Rationale pertaining to questions below: Management of public funds is supported by effective planning, budgeting, monitoring and reporting which are based on reliable information and the sound analysis of that information.

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. 2015-16 adjusted lapse at year-end as a percentage of annual voted authorities.

    • 3.1

      Program or Operating vote

    • 3.2

      Capital vote (if applicable)

    • 3.3

      Grants and Contributions vote (if applicable)

    • 3.4

      Total (all votes)

    Calculation of measure: 

    Total annual departmental adjusted lapse

    divided by

    Total annual voted authorities

    Calculation of adjusted lapse: 

    Annual voted authorities minus Expenditures minus Over-expenditures minus Multi-year authorities minus Unspent special purpose allotments minus Frozen allotments

Program or Operating Vote Adjusted Lapse: 

A management discussion should be considered for Program or Operating vote adjusted lapses less than 2% or greater than 5% of Program or Operating vote authorities.

Capital Vote Adjusted Lapse: 

Organizations should lapse less than 10% of their Capital vote authorities. Note that organizations can carry forward up to 20% of their Capital vote authorities if a carry forward rationale exists.

Grants and Contributions Vote Adjusted Lapse: 

A management discussion should be considered for Grant and Contribution vote lapses that are greater than 5% of Grants and Contributions vote authorities.

Total Adjusted Lapse: 

A management discussion should be considered for total adjusted lapses less than 2% or greater than 5% of total voted authorities.

N/A

TBS-OCG will respond using existing data within the central agencies (Expenditure Management System (EMS) and Central Financial Management Reporting System (CFMRS)).

  • Management Performance
    • Performance Indicator
  1. How many days after the start of the 2016-17 fiscal year did the department or agency managers at the lowest levels get access to their approved budget?

    Definitions: 

    Lowest level
    Refers to managers at the lowest level of a department or agency’s delegated financial authorities, typically the Responsibility Centre Manager.
    Access to their approved budgets
    Refers to financial system allocation of approved annual budget to the lowest level managers who have delegated financial authorities.

Department and agency managers at the lowest level of an organization’s delegated financial authorities should have access to their budget within 30 days of the start of the fiscal year.

N/A

Department or agency to provide number of calendar days.

No evidence required.

  • Management Performance
    • Internal Services Measure
  1. Does the department or agency proactively assess the multi-year financial risks associated with the following: 

    • 5.1

      Projected salary expenditures: 

      • Yes
      • No
    • 5.2

      Budgetary changes (including sunsetting programs): 

      • Yes
      • No
      • N/A
    • 5.3

      Revenue fluctuations: 

      • Yes
      • No
      • N/A
    • 5.4

      Funding pressures: 

      • Yes
      • No

Departments and agencies should identify and assess financial risks over a multi-year period (rolling three-year) as part of their approach to financial planning and budgeting.

N/A

Department or agency to respond.

No evidence required.

  • Management Practice
    • Practice

Internal control management

Outcome statement: Stewardship of public resources is adequately managed through risk-based internal controls.

Rationale pertaining to questions below: Internal controls refer to a set of means that organizations put in place to mitigate risks and provide reasonable assurance in the following broad categories: 

  • The effectiveness and efficiency of programs, operations and resource management, including safeguarding of assets;
  • The reliability of financial reporting; and
  • Compliance with legislation, regulations, policies and delegated authorities.

As per the Policy on Internal Control, an annual risk based assessment of the system of internal controls over financial reporting is required to determine its ongoing effectiveness.

Late payments and related payment of interest is a frequent issue arising from suppliers, in particular small suppliers. This issue is one of compliance with the Directive on Payment Requisitioning and Cheque Control.

The aging of accounts receivable indicates the length of time that money has been owed to the Crown. As per the Directive on Receivables Management, departments are expected to record and pursue the collection of receivables.

The recording of commitments is a key control to ensure there is a sufficient unencumbered balance before providing authorization for a planned expenditure. As per the Directive on Payment Requisitioning and Cheque Control, departments are expected to record a commitment for all planned expenditures, including staffing actions.

Policy on internal control

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. Has the department or agency implemented a risk-based ongoing monitoring program and conducted an annual risk-based assessment to continuously monitor the effectiveness of its internal controls over financial reporting?

    • Yes
    • No

Departments and agencies should continuously monitor the effectiveness of their internal controls over financial reporting and conduct an annual risk-based assessment of the system of internal control over financial reporting to determine its ongoing effectiveness.

Policy on Internal Control, 6.1.2

TBS will respond using the “Annex to the Statement of Management Responsibility Including Internal Controls over Financial Reporting” (published on Department or Agency website).

  • Management Practice
    • Policy Compliance

Payment on due date

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. What percentage of payments to suppliers in the 2015-16 fiscal year were made on time (i.e. as per the terms of payment or within 30 days of receipt of the invoice or goods/services, whichever is later), based on the total number of payments?

    (department or agency to provide number of payments to suppliers made on time and total number of payments to suppliers as descriptive statistics)

Organizations should pay all suppliers on time.

Directive on Payment Requisitioning and Cheque Control, 6.3.1

Department or agency to respond.

No evidence required.

  • Management Performance
    • Performance Indicator
  • Descriptive Statistics (2)
  1. Does the department or agency automatically pay interest to suppliers if payments are not made within the standard 30 day payment term?

    • Yes
    • No

Departments and agencies should automatically pay interest on payments made later than the due date.

Directive on Payment Requisitioning and Cheque Control, 6.3.3

Department or agency to respond.

No evidence required.

  • Management Practice
    • Policy Compliance

Management of accounts receivable

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. What percentage of the gross non-tax accounts receivable of the department or agency as at have been outstanding: 

    • Between 0 to 30 days
    • Between 31 to 60 days
    • Between 61 to 90 days
    • Between 91 to 365 days
    • For more than 365 days

Departments and agencies should pursue the collection of accounts receivable and, when deemed uncollectible, taking timely action regarding the write-off, remission, forgiveness, or waiver of the debts.

Directive on Receivables Management, 6.1.6 and 6.1.9

TBS will respond using existing data within the central agencies (Public Accounts Preparation System (PAPS)).

  • Management Performance
    • Performance Indicator

Recording of salary commitments

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
Table 6 Notes
Table 6 Note 1

The salary reports available to managers must identify the unencumbered balance.

Unencumbered Balance = Budget less Expenditures less Commitments (which may be extracted from Salary Forecasting Tool)

Return to table 6 note * referrer

  1. Do delegated managers have ongoing access to salary reportstable 6 note * to determine if there is sufficient unencumbered balance available prior to authorizing a staffing action?

    • Yes
    • No

    Definitions: 

    Ongoing access to salary reports

    Refers to: 

    • Delegated managers having the ability to extract salary reports1 directly from the departmental financial system or other reporting system; or,
    • Delegated managers automatically receiving salary reports1 from the Finance group on a regular basis (must be at least monthly).

Organizations should ensure salary commitments are recorded at the time of expenditure initiation and that delegated managers have ongoing access to salary reports identifying the portion of their salary budget that remains unencumbered.

N/A

Department or agency to respond.

The salary report(s) to which delegated managers have ongoing access must be submitted as evidence (1 document).

  • Management Practice
    • Practice

Transfer payments

Section only applies to departments and agencies with Transfer Payment Programs.

Note: Questions related more broadly to service standards for department or agency priority services are listed in the 2016-17 Service Management Methodology.

Outcome statement: Transfer payments are managed in a manner that is citizen and recipient focussed

Rationale pertaining to the questions below: This element aligns with the expected result of quicker funding decisions outlined in the Government Action Plan to Reform the Administration of Grant and Contribution Programs. Evidence gathered to date suggests that departments have room to improve in this area. Progress on this element has a direct impact on applicants and recipients. In practical terms, it is an element that is relatively easy to measure.

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. During the 2015-16 fiscal year, what percentage of the service standards established for department or agency transfer payment programs were met?

    (department or agency to provide number of service standards that have been met and total number of service standards established as descriptive statistics)

    Note: 

    Organizations that do not have any transfer payment programs should not respond to this question (i.e., leave response field blank).

Departments and agencies should meet service standards for their transfer payment programs.

N/A

Department or agency to respond.

No evidence required.

  • Management Performance
    • Performance Indicator
  • Descriptive Statistics (2)
  1. What percentage of the 2015-16 service standard performance results for department or agency transfer payment programs are available on a public website?

    (department or agency to provide number of service standards performance results available on a public website and total number of service standards performance results as descriptive statistics)

    Note: 

    Organizations that do not have any transfer payment programs should not respond to this question (i.e., leave response field blank).

Departments and agencies should ensure service standard performance results are publicly available.

N/A

Department or agency to respond.

The link to the website must be submitted as evidence.

(1 document)

  • Management Performance
    • Performance Indicator
  • Descriptive Statistics (2)

Stewardship of financial management systems

Outcome statement: Prudent investments are made in Financial Management Systems which are aligned with the OCG Financial Management Transformation Vision: “to implement a streamlined, consolidated & integrated Enterprise Model for financial management in the Government of Canada”.

Rationale pertaining to questions below: All departments or agencies must comply with the Policy & Directive on the Stewardship of Financial Management Systems to ensure prudent investments are made in the departmental Financial Management System in accordance with TBS/OCG direction. All departments or agencies must align to enterprise direction for Financial Management Transformation.

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. Before investing resources in the department or agency Financial Management System (FMS), has the department or agency consulted with its cluster, other departments and agencies, and with the OCG? Check all that apply: 

    • Cluster
    • Other departments or agencies
    • OCG
    • N/A (No investment of resources in the department or agency FMS during the 2015-16 fiscal year)

Departments and agencies should consult with the cluster, other departments and agencies, and the OCG before investing resources in the department or agency Financial Management System.

Directive on the Stewardship of Financial Management Systems, 6.1.4

Department or agency to respond.

No evidence required.

  • Management Practice
    • Policy Compliance

Financial community capacity

Outcome statement: Strengthen public sector financial management and its leadership within the financial community and within departments thereby contributing to appropriate stewardship of public resources, effective decision making, and efficient policy and program delivery.

Rationale pertaining to questions below: Financial Community Capacity is essential to supporting a sound financial departmental function.

Indicators and Calculation Method (where applicable) Expected Result Policy Reference Evidence Source and Document Limit Category
  1. Was the Comptroller General advised of the appointment (including acting more than 6 months), transfer or departure of the Chief Financial Officer (CFO)?

    • Yes
    • No
    • N/A (No appointment (including acting more than 6 months), transfer or departure between and )

Organizations should ensure the Comptroller General is advised of the appointment, transfer, or departure of the CFO.

Policy on Financial Management Governance, 5.1.8

Department or agency to respond.

No evidence required.

  • Management Practice
    • Policy Compliance
  1. Has the department or agency established succession plans for critical financial management positions?

    • 15.1

      CFO position: 

      • Yes
      • No
    • 15.2

      DCFO position: 

      • Yes
      • No
    • 15.3

      Other key positions: 

      • Yes
      • No
      • N/A

Departments and agencies should have succession plans in place for critical financial management positions.

N/A

Department or agency to respond.

No evidence required.

  • Management Practice
    • Practice

Glossary

Financial Management System (FMS)

FMS is any combination of business processes (end-to-end, automated and manual), procedures, controls, data and software applications, all of which are categorized as either a departmental financial and materiel management system (DFMS) or program system or central system that produces financial information and related non-financial information.

Financial management systems are used for any of the following: 

  • Collecting, processing, maintaining, transmitting and reporting data about financial events and to maintain accountability for the related assets, liabilities and equity;
  • Supporting financial management, planning, budgeting and decision-making activities;
  • Accumulating and reporting cost information; or
  • Supporting the preparation of internal and external reports, such as departmental financial statements and input to the Public Accounts of Canada.
Financial Management Transformation (FMT)
FMT is a business-led effort across the Government of Canada to fundamentally change the way the financial management function supports enterprise management and decision-making to support effective program delivery and service to Canadians.
Office of the Comptroller General (OCG)

The Comptroller General of Canada is responsible for providing functional direction and assurance government-wide for financial management, internal audit, investment planning, procurement, project management, and the management of real property and materiel.

The Office of the Comptroller General supports the Comptroller General of Canada by working to ensure that sound policies, standards and practices are in place; by overseeing performance and compliance across the federal government; and by maintaining and building vibrant professional communities through a range of recruitment and development activities.

For additional definitions of the terms and expressions used in this questionnaire, please refer to Appendix B of the MRRS Instructions and Annex A of the Policy on Evaluation.

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